Gold Rally Driven by Massive ETF Inflows

[Ben Graham]

• Gold hits new record highs above $3,780 per ounce, up 43% YTD.
• Fed policy is not the only driver; ETF inflows are the key catalyst.
• SPDR Gold Shares absorbed 19 tons in a single day, boosting demand.
• Silver rallies above $44, eyeing its 2011 peak near $50.

Short Pause, Strong Rebound

The pause in gold’s rally after last week’s Fed meeting proved exceptionally brief. Prices surged in recent days, breaking above $3,780 per ounce, with today’s trading consolidating between $3,760 and $3,780. Since the start of the year, gold has gained an impressive 43%. While official commentary signals expectations for further Fed rate cuts, Fed Funds Futures remain stable, still pricing in less than 50 basis points of easing by year-end, in line with FOMC projections.

ETF Inflows as a Key Driver

This suggests that gold’s rally is not driven solely by monetary policy. The crucial factor lies in massive inflows into gold-backed ETFs. On Friday, Bloomberg reported inflows of nearly 27 tons — the strongest daily increase since January 2022 — with 19 tons going into the largest U.S. gold ETF, SPDR Gold Shares. Earlier this week, another 8.7 tons were added, bringing September’s total inflows to 88 tons. Strong institutional and retail demand is fueling the rally alongside concerns about Fed independence and rising geopolitical risks.

Overbought Market, Risk of Correction

With gold reaching new all-time highs, the market has entered overbought territory. This increases the likelihood of some speculative investors taking profits, potentially triggering a short-term correction. The pace of the current rally appears unsustainable in the long run.

Gold CFD chart, daily interval, source: Trading view

Silver Follows the Trend

Silver has also surged, rising above $44 per ounce to its highest level in 14 years. The gold-to-silver ratio temporarily fell below 85, its lowest in 2025. As long as gold remains in a strong uptrend, silver has room for further gains, with the historical resistance near $50 from April 2011 being a critical reference point.

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